All Forum Posts by: Jim Jones
Jim Jones has started 1 posts and replied 3 times.
Post: Is this a viable REPS strategy?
- Posts 3
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Ok thanks. I'm just trying to educate myself on the basic strategy before sitting down with a tax professional.
If I own a $1M property as an STR and manage it myself. I have no other w2 job, but my significant other has a w2 job. If I qualify as a REPS and do a cost seg study on the property to accelerate depreciation, can I generate significant tax savings due to depreciation expenses that can be used to offset my significant other's w2 income?
Additionally, can I replicate this yearly (by possibly doing a 1031 exchange) and getting a new property?
I'm just trying to understand if this scenario is possible.
Post: Is this a viable REPS strategy?
- Posts 3
- Votes 0
Thanks for the response. So just to clarify.
- My goal is 200K tax savings annually
- It sounds like 1031 exchange isn't unnecessary as I could just buy a property, cost seg it, get the tax savings, then sell it, as I'm looking to buy another. if i do that 1 per year, I probably would not have any meaningful gain/appreciation anyhow. So the 1031 is not needed. Does that sound correct?
- Also, sounds like you'd recommend going with short-term rental as REPS requirement isn't necessary, correct?
- If I purchase a $1M STR property can get $200K in tax savings out of that annually?
Thanks.
Post: Is this a viable REPS strategy?
- Posts 3
- Votes 0
I'm looking into qualifying as a real estate professional, as I currently don't have a w2 job. I would like to purchase a property, manage it and use losses to offset my spouse's high w2 income. I have the basic concept and understand the rules to qualify as a REP, but am wondering if the following blueprint is possible.
- 1) Purchase a multi-family or vacation property for $1M
- 2) Do a cost segregation study to qualify for accelerated depreciation to incur losses of say $200K
- 3) Manage property throughout the year to qualify as REP
- 4) Use $200K loss, to deduct from my spouse's w2 income on our joint return
- 5) Sell property using a 1031 exchange and repeat the process doing 1 property per year
Is this doable? I know I need to talk to a tax pro, but conceptually is this possible?